Senior News

Be careful with gifts when applying to ALTCS

Among other things, to qualify for Arizona Medicaid, single ALTCS applicants can have no more than $3,000 in countable assets.  The obvious – but incorrect – solution for an applicant whose assets exceed the threshold is to simply give away enough assets to meet the requirement.  In fact, adult children come in all of the time with the idea that they can transfer $100,000 of their mother’s money to various family members so that their mom can obtain Arizona Medicaid eligibility.  Of course, if it was this easy, there would be no need for ALTCS planning, and the Medicaid program would probably be broke.

When ALTCS/Medicaid applicants make transfers for below market value, or gifts, they are penalized with a period of ineligibility.  This is true despite the advice you may have heard from your tax planner about a $13,000 per person, per year gift allowance.  This allowance applies to federal tax rules, not to ALTCS rules, so even a small gift can be met with a penalty.  What happens is that ALTCS looks back five years for any gifts.  The total value of the gifts is then divided by the average cost of care in a nursing facility, and the applicant is penalized with a period of ineligibility in the amount of the quotient.

For example, let’s say Jane gifted $60,000 to her son in 2008, and decided to apply for Arizona Medicaid this year.  If the cost of care in Jane’s area is $6,000, ALTCS would divide the gift amount by the cost of care ($60,000/$6,000 = 10), and penalize Jane with ten months of ineligibility.  Of course, a variety of other factors also come into play with ALTCS eligibility, but the thing to take away here is that gifting carries severe penalties.

Applicants looking for other strategies should consult with an Elder Law attorney at JacksonWhite. Call (480) 818-6912


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